ETFs Full of Hot Air If Our Power Grid Doesn’t Get An Upgrade

September 03, 2008 at 2:00 pm by Timothy Hubbard

When it comes to making advances in alternative energy and giving some life to those exchange traded funds (ETFs), we could be ahead of our time. About 100 years too far.

Our nation’s aging power grid seems ill-equipped to handle our renewable-energy dreams. While new ways to generate power from sources such as solar and wind are coming fast and furious, getting those technologies to the market has become a challenge, says Matthew L. Wald for the New York Times.

Our grid today was conceived 100 years ago to let utilities prop one another up in order to reduce blackouts and share power in smaller areas. While only 1% of our electricity comes from wind turbines, experts believe that it could soon be as much as 20%, and our grid as it stands can’t handle it.

Hitting the 20% mark could mean moving large amounts of power over long distances - from the sparsely populated plains to the more densely populated coastal areas. The problem is transmission lines and their connections, which are too small for the amount of power companies want to push through them.

Getting the system up to speed could cost $60 billion or more, but would require no new technology.

If we take the steps to bring our grid into the current century, ETFs that could receive a breath of fresh air include:

  • First Trust Global Wind Energy (FAN), down 12.6% since July 27 inception
  • PowerShares Global Wind Energy (PWND), down 10.3% since July 8 inception
  • Utilities Select Sector SPDR (XLU), down 10.9% year-to-date
  • iShares S&P Global Infrastructure Index (IGF), down 19.5% year-to-date
  • SPDR FTSE/Macquarie Global Infrastructure (GII), down 13.2% year-to-date

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